Cuba announced yesterday that it will allow real estate to be bought and sold for the first time since the early days of the revolution, the most important reform yet in a series of free-market changes under President Raul Castro.

The law, which takes effect on 10 November, only applies to citizens living in Cuba and permanent residents, according to yesterday's Communist Party daily, Granma, and in the government's Official Gazette.

The law limits Cubans to owning one home in the city and another in the country, an effort to prevent the accumulation of large real estate holdings. It requires that all real estate transactions be made through Cuban banks, so they can be better regulated. The transactions will be subject to bank commissions.